Narrow Overnight, Fiscal Matters Eyed, Fresh TYJ Downside Seen

T-Notes have stuck to a narrow range in Asia-Pac trading, even with e-minis bid (NASDAQ 100 futures have tagged fresh all-time highs ahead of this week's earnings slate, which includes quarterly results from Apple, Microsoft & Facebook). The contract last deals -0-01+ at 136-31+, sticking to a 0-03+ range. Cash trade has seen some light bear steepening, with 30s sitting around 1.0bp cheaper than Friday's closing levels. On the flow side, further fresh TYJ1 downside exposure was seen, once again via a 10K block of the 138.00/133.50 risk reversal (this time hedged with 5.0K FV futures), with 30.0K lots of new Asia-Pac downside exposure via TYJ1 risk reversals established over the last week or so. Elsewhere, BBG sources pointed to a potential multi-tranche round of issuance from 7-Eleven, which could total ~$11bn.

• General headline focus has fallen on comments from Senator Bernie Sanders, who pointed to the Democrats being willing to force the COVID-19 support plan through Congress via reconciliation methods, if required (this isn't a surprise, but markets will now look to comments from the more moderate wing of the party re: the matter in the coming days). This outweighed the latest round of COVID worry, which is centred on Europe, as well as Sino-U.S. tensions re: Taiwan.
• Friday saw T-Note trade anchored around 137-00, which wasn't surprising given the large outstanding OI surrounding TYG1 137.00 options, with caution evident as cash equities were lower for most of Friday's session. Flow was dominated by steepener blocks (FV vs. US & TU vs. UXY). Cash trade saw some flattening, with 30s going out ~2.5bp richer on the day.
• Looking ahead, Monday will see 2-Year Tsy supply and an address from U.S. President Biden, which will be supplemented by the release of a couple of regional Fed economic activity indicators.